Key takeaways:
- Party City has filed for Chapter 11 bankruptcy protection and has reached a pre-negotiated agreement with a bondholder group to support an “expedited restructuring”.
- The restructuring is expected to substantially lower Party City’s debt and free up cash, and the company has obtained $150 million in debtor-in-possession financing.
- The company’s franchise stores, subsidiaries outside of the U.S. and its foil balloons Anagram business are not part of the restructuring.
Party City, a costume and party supplies chain based in Woodcliff Lake, New Jersey, has filed for Chapter 11 bankruptcy protection on Tuesday. The company, founded in 1986, said it had reached a pre-negotiated agreement with a bondholder group to support an “expedited restructuring” that is expected to be completed in the second quarter.
The restructuring is expected to substantially lower Party City’s debt and free up cash. The company has reported $1 billion to $10 billion of estimated assets and liabilities, and has obtained $150 million in debtor-in-possession financing.
Party City said its more than 800 company-owned and franchise stores throughout North America will remain open, and customers can still shop on the company website. The company’s franchise stores, subsidiaries outside of the U.S. and its foil balloons Anagram business are not part of the restructuring and will remain core components of its business.
The filing comes as the U.S. retail industry continues to suffer from persistently high inflation and a pullback in customer spending. Party City’s headquarters were moved to Woodcliff Lake, New Jersey in October 2022.
Party City is the latest casualty in the U.S. retail industry, and the company is hoping that its expedited restructuring will help it to remain a viable business in the future.
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